Simon Property Spins Off Washington Prime - Analyst Blog

Simon Property Group Inc. SPG, an equity real estate investment trust (REIT), has declared to spin-off Washington Prime Group Inc. As per the announcement, all the common shares of Washington Prime will be distributed to Simon's stockholders on May 28, 2014, on a pro rata basis.

Upon the completion of this spin-off, Washington Prime will become an independent and publicly-traded company. It will be listed in the New York Stock Exchange under the ticker WPG.

The latest move is in line with Simon's strategy to focus more on its global portfolio of larger malls, mills and premium outlets. Earlier in December last year, Simon spun off its smaller enclosed malls and strip center business. With this development, Bethesda, MD-based Washington Prime will own 54 strip centers and 44 smaller enclosed malls across U.S, covering an area of approximately 53 million square feet.

Currently, Indianapolis, IN-based Simon owns over 325 retail real estate properties in North America, Asia and Europe, covering around 242 million square feet area. As per the announcement, every shareholder of Simon is entitled to receive one common share of Washington Prime for every two common shares of Simon held as on May 16, 2014. For fractional shares, the shareholders of Simon will receive cash.

The spin-off is, however, subject to fulfillment of certain terms and conditions by Washington Prime. Notably, Goldman Sachs & Co. and BofA Merrill Lynch are serving as the financial advisors and Wachtell, Lipton, Rosen & Katz as the legal advisors to Simon.

Simon currently holds a Zacks Rank #3 (Hold).

Some better-ranked REITs include Acadia Realty Trust AKR, Agree Realty Corp. ADC and General Growth Properties, Inc GGP. All of these stocks carry a Zacks Rank #2 (Buy).